The coupon industry is a multi-billion dollar business generating significant savings for customers and allowing companies to compete in new markets, sell new products, and strengthen customer relations. In the US, over $331 billion worth of savings in paper coupons are in circulation each year. Even though the coupon industry offers many opportunities for savings for customers, many coupons go unredeemed. In fact, the coupon industry faces a very low redemption rate that is close to 1% for 300 billion issued coupons.
Unfortunately, the coupon industry suffers from a significant volume of fraudulent activities including duplication of coupons, alteration of coupons, or retailer fraud in the form of coupons that are redeemed for transactions that never take place. In some estimates, these fraudulent activities cost the couponing industry between $500 million and $800 million annually. In some cases, the fraudulent activity has been linked to the financing of terrorist activities with annual amounts of over $150 million.
Unlike the payment industry, the distribution, redemption and processing technologies used in the coupon industry are somewhat antiquated. Many coupons are issued as paper, which remains the principal distribution channel for coupon campaigns. Existing paper processing methods are very laborious and extremely time consuming with potential misredemptions and chargebacks for the retailers.